Today's Roof Leaker Stock Is TIBCO Software (TIBX)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified TIBCO Software ( TIBX) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified TIBCO Software as such a stock due to the following factors:

  • TIBX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $58.5 million.
  • TIBX has traded 862,591 shares today.
  • TIBX is trading at 2.66 times the normal volume for the stock at this time of day.
  • TIBX crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in TIBX with the Ticky from Trade-Ideas. See the FREE profile for TIBX NOW at Trade-Ideas

More details on TIBX:

TIBCO Software Inc. provides infrastructure and business intelligence software worldwide. The company offers products in the areas of integration and core infrastructure; business optimization; and process automation and collaboration. TIBX has a PE ratio of 45.7. Currently there are 3 analysts that rate TIBCO Software a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for TIBCO Software has been 2.6 million shares per day over the past 30 days. TIBCO Software has a market cap of $3.6 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.98 and a short float of 1.7% with 2.27 days to cover. Shares are down 4.2% year-to-date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates TIBCO Software as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.9%. Since the same quarter one year prior, revenues slightly increased by 2.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.58, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that TIBX's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.90 is high and demonstrates strong liquidity.
  • The gross profit margin for TIBCO SOFTWARE INC is currently very high, coming in at 72.52%. Regardless of TIBX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TIBX's net profit margin of 0.61% is significantly lower than the industry average.
  • Net operating cash flow has decreased to $18.05 million or 27.37% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The share price of TIBCO SOFTWARE INC has not done very well: it is down 11.39% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

null

More from Markets

Carnival CEO Arnold Donald: China Will Become the Largest Cruise Market

Carnival CEO Arnold Donald: China Will Become the Largest Cruise Market

Red Robin Slumps After Earnings Miss

Red Robin Slumps After Earnings Miss

Owner of Moviepass Sees Stock Plummet

Owner of Moviepass Sees Stock Plummet

Tiffany & Co. Sees a Strong Market in Asia

Tiffany & Co. Sees a Strong Market in Asia

Stocks Finish Higher After Release of Fed Minutes

Stocks Finish Higher After Release of Fed Minutes